Food and beverage companies are facing a rapidly changing world. Global demand is rising as the world’s population grows. Yet the planet’s ability to meet this demand is threatened by factors such as droughts and other expected consequences of climate change, together with land degradation and biofuel production. At the same time consumers everywhere are growing more knowledgeable and concerned about the ethics of where and how their food and drink are produced.
A number of innovative companies have begun integrating smallholders into their supply chains. There is evidence that this strategy can attract customers and manage supply risks. The investment by a company can be relatively modest if the company collaborates with farmers’ organisations, government, and other non-commercial actors. This approach to investment can have broader impacts on the rural sector, ensuring that trade benefits men and women farmers who are normally marginalised from wealth creation.
Ensuring a smallholder sourcing programme can deliver both commercially viable products and value to the smallholder, requires a number of structural challenges to be overcome. An increasing number of new business models are emerging of global and domestic companies that have adapted to overcome these challenges.
Key principles
Five principles to underpin sustainable trading relationships that ensure both corporate and smallholder value:

Chain-wide collaboration and innovation

Market linkages

Fair and transparent governance

Equitable sharing of costs and risks

Equitable access to services

This briefing builds on the Sustainable Food Lab work on ‘New Business Models for Sustainable Tarding relationships’ and Oxfam agricultral market programmes. Initial findings were shared at the Oxfam GB event in May 2009, ‘Business Models for a Better World’, with the briefing launched at the 2010 art of farming conferenceRead More

What opportunities are there at farm and local community level to increase the incomes of small-scale farmers? This series of booklets aims to raise awareness and provide decision support information about opportunities for increasing the incomes of small-scale farmers. Each booklet focuses on a farm or non farm enterprise that can be integrated into small farms to increase incomes and enhance livelihoods.

The booklets are primarily aimed at people and organisations providing advisory, business and technical support to resource-poor small-scale farmers and local communities in low- and middle-income countries. They are also intended for policymakers and programme managers in government and non-governmental organisations.

The enterprises selected are considered suitable for smallholder farmers in terms of resource requirements, additional costs, exposure to risk and complexity.

This booklet covers how vegetables can be grown for the home and for the marketRead More

This briefing paper focuses on how the growth of agriculture is essential, so the growth in the rural non-farm economy is especially important. Job prospects improve as education, skills, health and early nuitrition levels rise. Rural-urban migration - whether temporary or permanent - opensnew opportunities and also helps tighten the rural labour markets. With rising productivity and wages, it becomes easier to push for better labour standards and correct gender inequalitiesRead More

Agricultural markets play a key role in the lives of poor people in developing countries. More than half the population in developing regions (58 percent) and more than three-quarters of the poor — defined as those living on less than US$1 per day — live in rural areas where agriculture typically constitutes 50 – 90 percent of household income. As a result, the development of efficient agricultural markets has a large impact on the economic opportunities of rural households. Rural households, however, are subject to a number of constraints that make their participation in the market both costly and risky, often leaving them “unconnected.” This brief summarizes these constraints and examines policy interventions to address them.

Enabling farmers to sell their crops provides significant benefits: when constraints are removed, farmers can earn more by specializing in crops for which they have a comparative advantage and purchase commodities that are relatively costly for them to grow. Indeed, those who produce mainly for their own consumption are the poorest, while those who are well integrated into markets and specialize in a smaller number of crops are better off. Cases where commercialization coincides with the loss of farmer income certainly exist — as in the Philippines, where expanded sugarcane production meant that tenant farmers lost access to land for maize production — but in most cases markets provide opportunities for smallholders to improve their incomes and livelihoods. Higher income and/or nutritional status has been associated with the adoption of commercial farming in Guatemala (vegetables), Malawi (tobacco), India (dairy), and Kenya (sugarcane).&nbspRead More

Rural enterprises and diversification into market-oriented, income generating activities are being increasingly viewed as a path to improving both livelihoods and food security. The issue is not whether to participate in the market economy but how to do so in a manner which provides for sustainable and equitable income growth and decent work. Taking many forms including cooperatives, enterprise development is an appealing alternative for stakeholders in rural development, particularly as it contributes to equity through local economic growthRead More

Collective action occurs when more than one individual is required to contribute to an effort in order to achieve an outcome. People living in rural areas and using natural resources engage in collective action on a daily basis when they:

plant or harvest food together;

use a common facility for marketing their products;

maintain a local irrigation system or patrol a local forest to see that users are following rules; and

meet to decide on rules related to all of the above.

Frequently, however, it becomes difficult to exclude nonparticipants from benefiting from the collective action of others. This situation creates a collective action problem for the participants. When individuals seek out short-term benefits for themselves alone, they are better off when others contribute to the collective action and they do not. In this case, they benefit without paying the costs. Of course, if all individuals pursue short-term, self-centered benefits, no collective benefits are achievedRead More

Food safety standards that developed countries impose on developing-country exports have sometimes created a barrier to market access. But in Latin America today, the standards set by supermarkets in the region affect local producers far more than do those imposed by developed countries. Latin American farmers sell 2.5 times more to supermarkets within their own countries than they export to the rest of the world.
Drawing on case studies from several Latin American countries, this brief focuses on how supermarkets in the region have gone about imposing quality and safety standards on producers of fresh fruits and vegetables for the domestic market. Supermarkets in Brazil, Costa Rica, Guatemala, Honduras, and Nicaragua hold 75 percent, 50 percent, 35 percent, 20 percent, and 10 percent of the retail food market, respectively. Supermarkets’ share of the retail market in fresh produce lags behind their overall share of the retail food market. In Brazil, for example, supermarkets claim only about 30 percent of retail trade in fresh produce; the figure in Costa Rica is barely 10 percent. But supermarket retailing is rapidly overtaking traditional forms of food retailing in all of Latin America. Supermarkets in the region have an incentive to impose quality and safety standards on fresh fruits and vegetables because doing so improves the health value of produce and the state of public health. Moreover, supermarkets have the kind of large consumer base and efficient retail approach that allows them to make profits from imposing quality and safety standards. Since supermarkets buy a significant portion of local produce and have the appropriate monitoring capacity, they can demand safety and quality from their suppliers of fresh produce. Higher standards for fresh produce may alter the structure of production in that sector and affect the rate of return of small producers diversifying into those commoditiesRead More